Unlike that of its Russian and Azerbaijani neighbors, Armenian growth did not contract in 2016. In 2017, it will remain moderate. It held up well, thanks in particular to its robust mining sector and manufacturing industry. The increase in mining output, in general, and of copper, in particular, is expected to continue in 2017, buoyed by a slight rise in copper prices which have been falling since 2011. Moreover, the start of exploratory drilling as part of the Amulsar project should help increase gold output in 2017. The devaluation of the dram in November 2014 also helped sustain mining exports, which make up over half of total exports. Despite a positive trend, the pace of growth will remain less buoyant than during the 2000-2013 period (average of around 7%). The recession in Russia is partly responsible for this slowdown. Indeed, it is a major source of revenue for Armenia, in the form of expatriates' remittances, which decreased by about 40% between 2014 and 2016 and are critical to supporting household consumption (around 80% of Armenian GDP). The expected return to growth in Russia should, therefore, be synonymous with increased remittances to Armenia. The economy will, however, still suffer from major structural issues. Infrastructure deficiencies and lack of competition on the domestic market, institutional weakness and high and persistent levels of unemployment (around 18%), as well as the degraded business climate, are among the most important sources of vulnerability.
Inflation will no longer be negative in 2017, thanks specifically to stronger domestic demand, , higher prices for food and commodities, as well as an easing of the monetary policy of the Central Bank of Armenia, which cut its key rate by 225 basis points (from 8.75% to 6.5%) in 2016.